News Updates

Holiday pay

Tuesday 4th November 2014

The EAT has held that overtime should be taken into account when calculating holiday pay. However, workers will be unable to bring retrospective claims in an Employment Tribunal if there have been any gaps of more than three months between the alleged underpayments.

In its judgment in the cases of Bear Scotland Ltd & Others v Fulton & Others and two related appeals, the EAT concluded that the Working Time Directive requires workers to be paid “normal remuneration” during any holiday they are entitled to under the Directive (which would include pay for any normal, non-guaranteed overtime) rather than just basic hours’ pay. The right only applies to the minimum 4 weeks’ leave granted under EU law.

The employers in the case were successful in arguing a point which may restrict the ability of workers to bring claims, namely that if there has been a gap of more than three months between a series of underpayments, the Employment Tribunal loses jurisdiction to hear the earlier claims. Workers are also not entitled to retrospectively designate which holidays were “EU” holidays, and which were granted under UK legislation.

The EAT has granted permission to appeal to the Court of Appeal, recognising that the issues in the case are of public importance.The Government, which intervened in the case, has also announced that it is setting up a task force to assess the possible impact of the ruling.

All information in this update is intended for general guidance only and is not intended to be comprehensive, or to provide legal advice.